ZipGo Technologies Pvt. Ltd has suspended operations in Bengaluru after the Karnataka State Transport Department officials raided its office on Wednesday alleging the bus and van aggregator is violating rules and operating without permits.

The claim was denied by the company.

The regulator says there is no provision for ZipGo to operate services that directly compete with the state-run city bus service under the Karnataka Motor Vehicle Rules of 1989.

The rise of ride-hailing cab services Ola, Uber and TaxiForSure in the past few years has spawned multiple new transportation services aping the on-demand model, be it two-wheelers, shuttle services or shared rides.

Consumer Internet companies like Flipkart Internet Pvt. Ltd, Snapdeal.com (Jasper Infotech Pvt. Ltd) and Amazon Seller Services, the Indian unit of Amazon.com Inc., have been going through similar struggles to get the government to recognize their respective business models.

Many app-based transportation companies have started aggregation business hoping that regulations will catch up once the operations expand as in the case of cabs. These companies argue that they don’t not own cars or hire drivers, but are just technology providers that aggregate them. The regulator pushes back, saying it is a violation of rules in the name of technology.

Cab and shuttle services and experts say that the laws are yet to catch up.

“These companies are not licensees of the Regional Transport Authority. These are IT platforms that allow independent operators to aggregate and provide service in the interest of reducing traffic congestion on the roads,” a lawyer representing ZipGo told the transport department on Wednesday.

Cab-hailing services such as Ola (ANI Technologies Pvt. Ltd) have been running operations in India since 2010 without any law governing it. The existing Motor Vehicle Rules of 1988 didn’t have the provisions to govern technology platforms. In October, the centre issued guidelines for this new business model, identifying them as on-demand information technology-based transportation aggregators and not taxi firms.

These guidelines are not binding on state governments, which have powers to tweak rules.

ZipGo has launched women-only shuttle services in Gurgaon, but were unable to convince authorities in Bengaluru.

“Any service that the government thinks will eat into its monopoly and revenue will not be approved even if these platforms are helping the government in its efforts to reduce traffic itself,” said a person working closely with multiple shuttle service providers. He did not wish to be identified.

A roster of shuttle operators such as like Shuttl (Super Highway Labs Pvt. Ltd), Cityflo (Komorebi Tech Solutions Pvt. Ltd) and RBus (Raftaar Technologies Pvt. Ltd) have been operating in Mumbai and New Delhi over the past few months